The Right to Manage (RTM) remains an important option for leaseholders seeking greater control over the management of their building. With recent legislative changes widening access to RTM and further leasehold reforms on the horizon, it is an area that continues to attract attention from leaseholders, landlords and property investors alike.
What is the Right to Manage (RTM)?
The Commonhold and Leasehold Reform Act 2002 provides a statutory framework enabling qualifying leaseholders to establish a Right to Manage company and take over certain management functions from their landlord, without having to purchase the freehold.
For leaseholders, this can provide greater influence over decisions concerning repairs, maintenance, buildings insurance and the appointment of managing agents. It can also offer an opportunity to improve transparency and ensure that the management of a building better reflects residents’ priorities.
However, RTM is not simply a means of replacing a managing agent. It transfers significant management responsibilities to the RTM company, which must be prepared to oversee expenditure, comply with relevant legal obligations and make decisions in the interests of the building.
How Has the Leasehold and Freehold Reform Act 2024 Changed the Right to Manage?
The Leasehold and Freehold Reform Act 2024 introduced changes intended to make RTM more accessible. Among the key reforms, the permitted non-residential proportion of a building increased from 25% to 50%, potentially allowing leaseholders in a wider range of mixed-use developments to qualify.
These developments may create new opportunities for leaseholders who were previously unable to exercise the right. Nevertheless, eligibility requirements and statutory procedures remain important. Before proceeding, leaseholders should establish whether their building qualifies, understand the steps involved in making a claim and assess whether they have the resources and expertise to manage the building effectively.
Landlords and property investors should also consider the implications. A change in management arrangements can affect the relationship with leaseholders, the administration of service charges and the way a property is managed over the longer term.
What Might Come Next for Leasehold Reform and Commonhold?
The wider leasehold reform agenda continues to evolve. Proposals to promote commonhold as an alternative to traditional leasehold ownership could, in time, provide a different model under which flat owners hold freehold interests in their individual units and participate in the management of shared areas. The detail and implementation of any further reforms will be important to monitor.
How to Prepare for the Right to Manage: Taking the Right Approach
RTM can offer meaningful benefits, but it requires careful preparation. Understanding the legislation, following the correct statutory process and planning for the practical responsibilities of management are essential to achieving a successful outcome.
Our property team advises leaseholders, landlords and investors on RTM, leasehold management and residential property reform. We can help clients understand their options, assess the implications of legislative changes and take informed decisions about the management of their properties.
For more information, contact Rebecca Hall on 01925 263273, or via email to enquiries@fionabruce.co.uk.
The contents of this post do not constitute legal advice and are provided for general information purposes only ■
